HomeMy WebLinkAboutItem 5 - PH/Toxics RTK Fees EUGENE CITY COUNCIL
AGENDA ITEM SUMMARY
Public Hearing: An Ordinance Concerning Hazardous Substances User Fees; Amending
Sections 3.692 and 3.694 of the Eugene Code, 1971; and Adding Section 3.695 to that Code
Meeting Date: February 14, 2005 Agenda Item Number: 5
Department: Fire and Emergency Medical Services Staff Contact: Glen Potter
www. cl. eugene, or. us Contact Telephone Number: 682-7118
ISSUE STATEMENT
The Eugene Toxics Right-to-Know Program is funded by fees assessed to local businesses that are
hazardous substance users. A state-imposed fee cap of $2,000 per facility took effect last year, resulting
in a substantial fee increase for smaller participating businesses while reducing fees for larger
businesses. The council directed the Toxics Board to return with a proposed remedy for this perceived
inequity in time for the 2005 program billing cycle.
In a work session on January 10 of this year, the council considered two proposals brought forward by
the board, and decided to move forward to public hearing on an ordinance that would add certain types
of businesses to the program, and would also reduce the threshold employee level for manufacturers
from 10 to 2. The proposed ordinance is attached. At the same work session, the council reaffirmed the
City's support for a repeal of the State fee cap.
BACKGROUND
Through the citizen initiative process, in 1996 Eugene voters amended the City Charter to enact the
Toxics Right-to-Know Program (the "amendment"). Article VII, paragraph D of the amendment
requires that the Charter-created program be self-supporting. Fees have been assessed to each
participating business on the basis of full-time-equivalent (FTE) employees working at each business in
a calendar year. (Oregon courts have concluded that a program of this type may not assess fees based on
quantities of hazardous substances reported.) The number employed by individual participating
businesses has ranged from 10 to 1,207. At this time, 73 local manufacturers are required to pay fees,
and 40 of those are required to file reports.
(There is a threshold of 2,640 pounds of total hazardous substance inputs that must be reached before a
company is required to report. However, the State Court of Appeals ruled in 1999 that the City may not
use that threshold, or any quantity-based criterion, for determining which companies are required to pay
fees or for determining the level of fees.)
The annual budget for the program has averaged about $100,000, which funds 0.5 FTE of direct staff
support, 0.25 FTE ancillary staff support, plus legal fees and materials and supplies. The total number
of FTE against which fees are assessed has ranged from approximately 6,000 to 7,000. Consequently,
fees have been about $13 per FTE, though this has varied somewhat based on actual program
requirements. The City Council approves the fees each year prior to billing, which normally occurs in
April.
L:\CMO\2005 Council Agendas\M050214\S0502145.doc
For 2003, the fee was $13.92 per FTE. For 2004, because of the $2,000 cap, the fee was $31.65 per FTE
up to $2,000. Businesses with more than 63 FTE paid less than $31.65 per FTE, with the largest
business, employing 1,207, paying $1.66 per FTE. Without the state fee cap, the recommended fee
would have been $14.35 per FTE for all participating businesses.
Polling of businesses for their 2004 FTE levels is now virtually complete for purposes of determining
2005 fees under a status quo scenario. That recommendation would be $30.30 per FTE, again up to the
$2,000 cap.
The City's current right-to-know program consists of elements that are required by the amendment,
elements that are not required by the amendment (but are necessary for the program to be functional),
and others that may or may not be Charter-mandated, depending on how certain provisions of the
amendment are interpreted. Pursuant to Article VII, paragraph D of the amendment, only those
elements that are required by the amendment must be paid for by "hazardous substance users" as that
term is defined by the amendment. Any components of the current right-to-know program that are not
required by the amendment can be paid for by businesses that do not fall within the amendment's
definition of "hazardous substance users." As such, while revenues collected pursuant to the proposed
ordinance can fund elements of the program not mandated by the amendment, the revenues cannot fund
Charter-mandated elements of the program.
Examples of Charter-mandated activities include audits of hazardous substance reports, public posting
of reports (at the library and on the Internet), investigation of complaints, invoicing and collections, and
at least some of the activities provided in direct support to the Toxics Board. Examples of non-Charter-
mandated activities include providing assistance to reporting businesses (both by individual consultation
and by annually issuing tracking and reporting instructions), legal work in response to litigation and
other legal issues, responses to public and media inquiries, technological updates to the program's
website and business reporting software, and supervision of program staff. The level of direct support to
be provided to the Toxics Board is not specified in the Charter, which provides instead that "[t]he City
Manager shall consult with the Toxics Board in order to jointly determine the appropriate support
services that shall be provided..."
Opponents of the proposed ordinance assert that the City cannot adopt the proposed ordinance because it
"amends" the Charter. While the City cannot adopt an ordinance "amending" the Charter, as a home
rule city with broad grant of authority under Section 4(2) of the Charter, the City may enact an
ordinance requiring facilities to submit materials balance reports and pay a hazardous substance user fee
so long as the ordinance does not conflict with State law (or some other part of the Charter). This broad
authority to adopt an ordinance exists independent of the amendment. Thus, the City can expand the
right-to-know program in any way it sees fit, so long as the expansion does not contradict the
amendment or state law. Such an expansion of the right-to-know program does not create a "separate
program;" rather, it consistently adds to the existing program that was established by the amendment.
Since the amendment does not impose limitations on the council' s authority with respect to companies
that fall outside the amendment's definition of"hazardous substance user," nothing in the amendment
(or elsewhere in the Charter) constrains the council's authority. As such, the City can use its broad
home rule authority to adopt an ordinance that requires companies that do not fall within the
amendment's definition of"hazardous substance user" to fund the elements of the program that are not
required by the amendment.
L:\CMO\2005 Council Agendas\M050214\S0502145.doc
DETAILS OF PROPOSAL
A subcommittee of the Toxics Board developed a list of types of businesses which could and possibly
should be added to the program, not only in order to reduce the fee burden for currently participating
businesses, but also to provide additional public reporting of hazardous substance use in the community.
Businesses to be added would include gas stations, auto body and paint shops, dry cleaners, roofing
contractors, painting contractors, any business operating a spa and/or a swimming pool (including hotels
and motels), photofinishing services (except one-hour), and crematories.
In addition, the proposed ordinance would reduce the FTE threshold for program participation from 10
to 2, meaning that smaller businesses in the already existing covered classifications (all manufacturing)
would now be required to pay fees and possibly to report. The quantity threshold for required reporting
would remain at 2,640 pounds of total hazardous substance inputs in a calendar year. It would remain
the case, as it is now, that a number of businesses would be required to pay fees but would not be
required to report.
Staff has completed preliminary research regarding the potential fee and reporting impacts of the
ordinance. This research included interviews with principals of potentially affected businesses, requests
for information from the Oregon Construction Contractors Board, actual counts of potentially affected
businesses, and in some cases, estimates of their FTE levels and their probability of being required to
report. The results, which remain preliminary pending actual implementation of the ordinance, are:
EXISTING PROGRAM:
Number of fee-paying businesses: 73
Number of covered FTE: 6,730
Number of reporting businesses: 40
Estimated 2005 fee: $30.30/FTE up to $2,000
WITH PROPOSED ORDINANCE:
Number of fee-paying businesses: 240
Number of covered FTE: 8,300
Number of reporting businesses: 90
Estimated 2005 fee for all program participants: $25.67/FTE up to $2,000
Fee examples for this year, based on the above:
Without proposed ordinance With proposed ordinance
Rate per FTE 2005 fee Rate per FTE 2005 fee
20 FTE $30.30 $606 $25.67 $513.40
50 FTE $30.30 $1,515 $25.67 $1,283.50
500 FTE $4 $2,000 $4 $2,000
The research found that photo processors, dry cleaners, and crematories probably would not be required
to report, while some of the other businesses listed (in particular, gas stations, pool operators, and
possibly some auto body and paint shops) probably would be.
The estimated 2005 fee includes additional staff support and additional legal assistance for the program
for FY06. It is possible that the necessity of this additional help may decline in future years, after the
program restabilizes.
L:\CMO\2005 Council Agendas\M050214\S0502145.doc
To develop an actual 2005 fee recommendation under the proposed ordinance, it would be necessary to
specifically identify all businesses to be added to the program, poll them to determine their 2004 FTE
levels, add those FTE to the existing FTE pool (polling to determine the existing FTE pool is being done
now), and then recalculate the FY06 program budget requirements and applicable fees. 2005 billing
would be delayed.
Under the proposed ordinance, initial fees for new businesses would be payable in 2005, but the first
reporting year would be 2006, meaning that the first reports for new participating businesses would not
be due to the City until April 2007. As was done in 1997 under the original program, the initial year
(2005) would be used to identify and educate affected businesses, which would then be required to track
and substance use for the following year and report it by April 1 of the year after that.
The council has also requested information on how the Lane Regional Air Pollution Authority (LRAPA)
uses the data already being reported, and how that agency might use the additional data that would be
required by the proposed ordinance. LRAPA staff report that they do not use the existing data, though
they acknowledge that it could be used on occasion as a cross-check against air emissions data reported
to their agency. Information available through the Toxics Program represents only a very small fraction
of the hazardous chemicals in Eugene's airshed, and an even smaller fraction when LRAPA's
countywide jurisdiction is considered. Air pollution from cars and trucks is of a far greater magnitude
than that from Eugene manufacturers. Further, because the Toxics Program is pre-empted by state law
from requiring pesticide reporting, some information that might be useful to LRAPA is not available.
Although one member of the LRAPA Board has indicated support for this ordinance, the full board has
not taken a position on it. As of this writing, the LRAPA Board was scheduled to meet on February 10
to consider a staff recommendation that no position be taken, given that this is a City of Eugene matter
and given further that the programs have little practical relationship.
LRAPA staff did offer some recommendations, should the City in the future wish to augment local
reporting of air emissions: that the two agencies work together from the outset to design an approach;
that reporting entities be required to acknowledge other environmental reports that they are required to
submit, and permits that they are required to obtain; and that new reporting requirements target types of
emissions, rather than types of businesses.
RELATED CITY POLICIES
A number of City policies are germane to this issue. The Toxics Program itself was enacted by
amendment to the City Charter in 1996. Previous City Councils have remained as faithful as possible to
the original intent of the voters in enacting the amendment, even as litigation and legislation made this
increasingly difficult. (The $2,000 cap is one example. In 1999, the Oregon Court of Appeals ruled that
the City's quantity threshold for requiring fees in and of itself constitutes an impermissible assessment
of fees based on quantity. This judgment caused the City to add about 30 businesses to the program
which were and still are required to pay fees but not to file hazardous substance reports.) The 2003-
2004 City Council Goals call for a safe community (to which, many would say, the Toxics Program
contributes) and for fair, stable, and adequate financial resources. Finally, the City's 2005 Legislative
Policies include support for legislative remedies to local Toxics Program fee problems stemming from
State law.
L:\CMO\2005 Council Agendas\M050214\S0502145.doc
COUNCIL OPTIONS
None; this is a public hearing only. After the hearing, the council may:
1. Proceed to action (City Council action on this item is tentatively scheduled for February 28);
2. Decline to proceed; or
3. Provide other direction.
CITY MANAGER'S RECOMMENDATION
Staff recommends Option 2: decline to proceed. Because of state legislation and court decisions, the
current Toxics Program already differs from what voters enacted in 1996. Further, based on the analysis
above, the ordinance would do relatively little to solve the problem it was intended to address, which is
that of fee inequity. It would provide some additional public information, but if that is the council's
goal, then this specific direction needs to be given, as it suggests other possible courses of action.
A direct solution to the present problem is being pursued by the City at this time, as staff has identified
sponsors of new state legislation to repeal (or possibly at least increase) the $2,000 cap on fees.
Should the council accept the recommendation not to proceed, then staff will return with a status quo
program budget and fee recommendation for this year to continue the program in FY06. Should the
council proceed to action, and adopt the ordinance, the fee recommendation and 2005 billing will be
postponed pending the completion of staff work necessary to identify affected businesses and their FTE
levels, and to revise the proposed budget to reflect the additional cost of administering an expanded
program.
The recommendation not to proceed with the ordinance is also based on the fact that, rather than making
fairness issues go away, it will create more. As an example, if an athletic club operates a swimming
pool, must it then declare all of its employees and all hazardous substances used in its entire operation?
A hospital operating a therapy whirlpool (spa) would be another example. Will painting contractors be
required to report substances purchased in Eugene, but used outside of Eugene? Similar issues exist
with the current program, and have been addressed to the satisfaction of some, but it is not
recommended that additional issues be created.
SUGGESTED MOTION
None; this is a public hearing only.
ATTACHMENTS
1. Proposed ordinance adding businesses to Toxics Program.
FOR MORE INFORMATION
Staff Contact: Glen Potter
Telephone: 682-7118
Staff E-Mail: glen.d.potter~ci.eugene.or.us
L:\CMO\2005 Council Agendas\M050214\S0502145.doc
ATTACHMENT A
ORDINANCE NO.
AN ORDINANCE CONCERNING HAZARDOUS SUBSTANCES
USER FEES; AMENDING SECTIONS 3.692 AND 3.694 OF THE
EUGENE CODE, 1971; AND ADDING SECTION 3.695 TO THAT
CODE. (CB #4894)
The City Council of the City of Eugene finds that:
A. Amendment IV to the Eugene Charter of 2002 was adopted at the general
election on November 5, 1996 (the "Amendment"). The Amendment provides in part
that hazardous substance users in Eugene shall file an annual materials balance report
that lists inputs and outputs of all hazardous substances obtained, used or generated
and that hazardous substance users shall pay an annual fee to Eugene sufficient to
jointly cover the implementation of the Amendment.
B. As a result of the Court's decision in Advocates for Effective Regulation, et
al. v. City of Eugene, 160 Or App 292 (1999), the City adopted Eugene Code provisions
3.690 - 3.696. These provisions separated the reporting requirement from the fee
requirement. To comply with ORS 453.402(6), as interpreted by the court, the
requirement to pay the fee is not dependent on the quantity (above zero) of hazardous
substances used. Currently, facilities that fall within the Code's definition of "hazardous
substance user" must pay the user fee. Facilities that fall within the Amendment's
definition of "hazardous substance user" must also submit the materials balance report.
The fee schedule adopted in the aftermath of the court ruling assesses a facility a
hazardous substance user fee if it uses any amount of hazardous substance (i.e., above
zero), employs more than 10 FTEs and is within a specific SIC code. The fee assessed
is based on the number of full time employees (FTEs) employed at the facility.
C. On July 1, 2003, amendments to ORS 453.370(2) took effect. The
amended statutory provision provides that fees for a local right-to-know program such
as the City's program may not exceed $2,000 for any single facility in any calendar year.
Thus, pursuant to amended ORS 453.370(2)(b), the City cannot adopt a fee schedule
that imposes a fee of more than $2,000 for any single facility in any calendar year. In
accordance with ORS 453.370(2)(b), the City's current fee schedule does not impose a
fee of more than $2,000 for any single facility.
D. Currently, the fee to be paid by hazardous substance users within the City
is $31.65 per FTE (not to exceed $2,000). With the fee capped at $2,000, the cost per
FTE must be set higher in order to fund the Program. The court requirement that the
fee not be quantity based and the statutory mandate that the fee be capped at $2,000
creates a variety of perceived inequities.
E. On March 10, 2004 the Eugene City Council asked that the Toxics Board
return to Council a "proposal to address the fee inequity and concerns caused by
Ordinance- 1
legislative actions and court decisions, while preserving the general intent of the voters
in adopting the program." In response to the Council's motion the Toxics Board has
recommended that the definition of "hazardous substance user" be revised to reduce
the FTE threshold from 10 FTEs to "more than 2 FTEs" and that the definition be
expanded to include additional facilities. By expanding the definition of hazardous
substance user to encompass more facilities, the cost to fund the program will be
dispersed among a greater number of facilities, thereby addressing the perceived
inequities of the current fee structure.
THE CITY OF EUGENE DOES ORDAIN AS FOLLOWS:
Section 1. The definition of "Hazardous substance user" in Section 3.692 of the
Eugene Code, 1971 is amended, and a new definition of "NAICS" is added thereto, to
provide:
3.692 Hazardous Substances User Fee- Definitions. Notwithstanding any
definitions contained in the amendment, as used in sections 3.690 through
3.696 of this code, the following words and phrases mean:
Hazardous substance user. Any business that operates a stationary facility
within the city limits of Eugene that:
(a) ,,r~oo,,.,., ! 0 .., ......,, ,.., ... ,~-r~°'], ._.., Has more than 2 FTEs; and,
(b) Has an NAICS or SIC code of any the following and falls within the
parenthetical descriptions provided herein: NAICS 23816/SIC 1761
(roofing contractors), NAICS 23832/SIC 1721 (painting and wall
covering contractors), NAICS 447/SIC 5541 (gasoline stations),
NAICS 71394/SIC 7991&7997 (fitness and recreations sports
centers operating a spa and/or pool), NAICS 72111/SIC 7011
(hotels and motels operating a spa and/or pool), NAICS 81112/SIC
7532 (automotive body, paint, interior and glass repair), NAICS
81222/SIC 7261 (crematories), NAICS 81232/SIC 7216 (dry-cleaning
and laundry services, except coin-operated), and NAICS 81292/SIC
7484 (photofinishing, except one-hour) and uses any quantity of
hazardous substance; or,
(b) Has a SIC code between 2000 and 3999 inclusive[~] and uses
[(c-~] any quantity of hazardous substances [6:~aeve-ze¢~] in its
manufacturing processes.
NAICS. North American Industry Classification system categories as
listed in the 2002 North American Industry Classification System
Manual.
Section 2. Section 3.694 of the Eugene Code, 1971 is amended to provide:
3.694 Hazardous Substances User Fee - Imposed. A fee is hereby imposed
upon hazardous substance users. The fee shall be an amount per FTE and
shall be paid annually no later than May 1 of each year [,
Ordinance - 2
late~]. Notwithstanding the provisions of section 2.020 of this code, the
specific amount of the fee shall be established by [msolut4on] ordinance of
the city council.
Section 3. A new Section 3.695 is hereby added to the Eugene Code, 1971, to
provide:
3.695 Hazardous Substances User- Report Required. Hazardous substance
users with a total input of more than 2,640 pounds of hazardous
substances during a calendar year shall file an annual, public, materials
balance report in accordance with the requirements and definitions of
the amendment. Hazardous substance users not required by the
amendment to file a materials balance report shall file their first report
in 2007 and every year thereafter.
Section 4. The City Recorder, at the request of, or with the concurrence of the
City Attorney, may administratively correct any reference errors contained herein or in
other provisions of the Eugene Code, 1971 to the provisions added, amended or
repealed herein.
Passed by the City Council this Approved by the Mayor this
day of ,, 2005 __ day of ,, 2005
City Recorder Mayor
Ordinance - 3